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Questions & Answers

Honda Consent Order with NHTSA

What matter did this Consent Order Honda has entered into an agreement with the National
settle?
Highway Traffic Safety Administration (NHTSA) to resolve the
governments inquiry into Hondas early warning reporting as
required by the Transportation Recall Enhancement,
Accountability and Documentation (TREAD) Act.
The Consent Order follows Hondas November 24, 2014
response to a Special Order issued by NHTSA in early
November. That Order was prompted by Hondas disclosure
to NHTSA of preliminary findings from a third-party audit the
company commissioned in September 2014 in response to
inadequately addressed discrepancies in Hondas early
warning reporting

What is Hondas reaction to the


record size of this civil fine?

Honda had previously acknowledged shortcomings in our


early warning reporting and we will now move forward to
build on the actions we have already taken to address this
matter.

Has anyone been fired as a result


of Hondas underreporting?

No Honda associate has been terminated related to this


matter. The company is initiating new training regimens,
changing internal reporting policy, making staffing and
organizational changes, and enhancing oversight of its early
warning reporting process.

Did Honda fail to report Takata


airbag inflator deaths or injuries
under its Tread Act reporting
obligations?

While Honda acknowledged that eight Takata-related claims


or notices were not included in early warning reporting,
including one fatality and seven other injury claims, each of
these claims or notices was disclosed to NHTSA in detail by
other means.
Importantly, the fatality that was not included in EWR
reporting was disclosed to NHTSAs investigative staff before
the time when reporting would have been required through
quarterly early warning reporting.

Why did Honda settle with the


government?
Does Honda dispute any of the
findings in the Consent Order?

Did Honda admit any liability in


settling with the government?

Honda admits that it violated the TREAD Act reporting


requirements by failing to submit all early warning report
information as required. Honda is settling this matter to
establish remedial measures with the purpose of mitigating
the risk of future violations and to avoid the legal expenses
and other costs of a protracted dispute and potential
litigation.

As stated in the Consent Order, and as previously reported


by Honda in its November 24, 2014 response to a NHTSA
Special Order, Honda admits that it violated the TREAD Act
reporting requirements by failing to submit all required early
warning information.
Honda acknowledges that it failed to report certain death and
injury incidents that were required to be reported to NHTSA.
In addition, Honda acknowledges that it failed to report
customer satisfaction campaigns, special warranty
extensions, and warranty claims that involved good will, thirdparty vehicle service contracts, or Honda-certified, pre-owned
vehicles, as required by NHTSAs EWR regulations. These
violations date back to the inception of the EWR reporting
requirements in 2003.

What has Honda done to address


the reporting violations?

Please review the fact sheet that Honda has developed


which provides background on this subject.

How long is Honda required to


abide by this consent order?

Most of Hondas requirements under this agreement are in


place for a period of one year, and some continue after that
time.

Do you envision any new


information to come out concerning
Honda early warning reporting via
NHTSA investigation or your own
audits?

We cannot speculate as to what information might be


revealed through our review of our past early warning
reporting. However, we are committed to ensuring that we
fulfill all requirements in our past, current and future early
warning reporting.

10 Who conducted your third party


audit?

The law firm of Bowman and Brooke began the audit on


September 23, 2014.

11 Was this audit independent?

Honda asked Bowman and Brooke to perform a transparent


report on our shortcomings in Early Warning Reporting.

12 Are you willing to make the audit


report public?

Honda expects that NHTSA will release the audit report to


the public after it completes its review.

13 When did you first learn of


discrepancies in your TREAD Act
reporting?

We believe that a Honda associate first recognized an issue


related to the recording of an oral date code in the legal file
management system in 2011 and thought that it could have
affected the accuracy of the EWR reports; however,
apparently, there was no follow-up.
NHTSA made Honda aware of a possible under-reporting of
EWRs in early January 2012 in connection with NHTSAs
review of Takata air bag inflator rupture incidents that Honda
had proactively disclosed to NHTSA. NHTSA staff noted that
not all of the incidents were located in Hondas EWR filings.

14 If you knew about these problems


in 2011, why did it take more than
2 years to launch your third-party
audit and report your findings to
NHTSA?

We believe that a Honda associate first recognized an issue


related to the recording of an oral date code in the legal file
management system in 2011 and thought that it could have
affected the accuracy of the EWR reports; however,
apparently, there was no follow-up.
NHTSA made Honda aware of a possible under-reporting of
EWRs in early January 2012 in connection with NHTSAs
review of Takata air bag inflator rupture incidents that Honda
had proactively disclosed to NHTSA. NHTSA staff noted that
not all of the incidents were located in Hondas EWR filings.
Honda began looking into the issue at that time, but did not
take conclusive action.
Honda began a third-party audit to review the under-reporting
in September 2014, and first notified NHTSA of the
discrepancies in Hondas Early Warning Reporting in October
2014.
Honda acknowledges that it lacked the urgency needed to
correct its problems on a timely basis.

15 In entering injury and death claims


into the companys database why
didnt Honda consistently enter a
date in the written claim received
field?

Honda had not provided adequate training to the associates


responsible for data entry to ensure that they had an
adequate understanding of the required data fields that were
to be completed.
Honda will implement full training regarding the data entry
process, including refresher training with detailed written
guidelines

16 Why did the computer program not Early Warning Reports are required to identify the particular
properly map all of Hondas internal component (e.g., brakes) involved in the injury or death
sub-codes to a NHTSA code?
claims being reported using a series of NHTSA codes.
Historically Honda has maintained a more exhaustive series
of its own component/defect sub-codes to track incoming
claims. However, the EWR computer program was not set
up properly at the outset, and did not properly map all of
Hondas comprehensive internal sub-codes to a NHTSA
code. Therefore, when generating its Early Warning Reports,
Hondas computer program missed some incident reports
thus underreporting claims.
Honda is in the process of correcting the computer
programming issue and mapping the complete universe of
Hondas codes to correspond to NHTSA component codes.

17

Why did Honda adopt a narrow


interpretation of what constitutes a
written notice under NHTSAs
rules?

Honda believed that the reporting regulation was focused on


information received from customers or their representatives,
rather than information that Honda obtained at its own
initiative. Going forward, Honda will be reporting all claims
and notices of death and injury, so this distinction will not
matter.
We now understand very well the reporting requirements.

18 Was Hondas under-reporting


deliberate?

Our review to date indicates no evidence that anyone at


Honda designed the EWR system to deliberately underreport information. In order to ensure these errors do not
happen again, Honda is in the process of enhancing its
oversight of the Early Warning reporting process, and will
make organizational and staffing level changes in the
functional areas responsible for its Early Warning reporting.